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The Insurance Regulatory and Development Authority of India (IRDAI) has put on hold the re-appointment or extension of ON Singh as Non-Executive Chairman of Universal Sompo General Insurance Company (USGIC).
Governance lapse
The tenure of Singh, a key founding member of the company, ended in January, but his role is under a cloud. BusinessLine had reported on February 21 that an internal inspection by IRDAI had found instances of corporate governance lapses at the company, which mainly invloved Singh.
IRDAI wants to clear the air on several issues of related-party transactions before permitting Singh’s re-appointment, source said. Also, the regulator will inspect Risk Care Insurance, a broker empanelled with USGIC, as it is promoted by the close family members of Singh and had several instances of cheque-bouncing worth crores.
IRDAI usually conducts an inspection of insurance brokers in two or three years, but none were conducted on Risk Care in nearly a decade, the source said.
IRDAI’s inspection observing discrepancies in USGIC pertains to accounting year 2016-17, when it found that 4,059 premium collection cheques had bounced and that 1,124 belonged to a single broker, Risk Care.
Singh, whose wife, daughter, son and daughter-in law are among the shareholders of Risk Care, was the Managing Director of Sompo up to late 2016. Singh is also a director at First Advantage Finance & Investments, which holds 4.39 per cent stake in Risk Care.
In addition, payments made by Sompo to other vendors, including Adept Information Services, Mindpool Management Solutions, Krishi Care & Management Services, and Principle Security and Allied Services, too, had links with the family members of Singh, the IRDAI report shows.
Some companies had common directors and were registered at the same address in Mumbai to whom payments worth crores were made by Sompo. Even vendors for housekeeping and IT shared a common address.
When contacted, Sompo said they had no information from the IRDAI on the extension of Singh’s tenure being put on hold. It also denied any related-party transactions or conflict of interest as adequate disclosures were made.
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